Thought Post: Movies Releasing OTT, Why I Think Prime and Netflix Are in Over Their Heads

Well, this was inevitable. Inevitable since long time back, when the Indian government failed to provide the support needed to keep single screen theaters going. Theatrical releases of Indian films have been dying since satellite TV and multiplexes arrived back in the early 2000s. The switch to streaming was coming, unless massive government support stepped up to stop it (which was never going to happen). But I also don’t think the idea of a theatrical release will ever fully disappear.

The past few days have seen a series of announcements related to “OTT” release of films (OTT being an old term that makes no sense, “over the top”, meaning a cable box. In this context, it is referring to online streaming services releasing films that were intended for a theatrical release. Being “Drive’d” to use the DCIB terminology). Prime announced a whole list of big name big deal movies they just picked up for premier release. The producers association released a statement explaining they simply could not afford to keep sitting on these films without a profit. And the various movie theater groups released statements saying they have faith that theaters will survive this crisis and will come back. There’s a lot to unpack in this situation, and I have many thoughts.

Let’s start with the producers. For most Indian film producers, there is no margin. Or rather, there is negative margin. They are deeply in debt by the time the film is completed, they need the money from the film release to even get back to 0, let alone make a profit. And that’s in the Hindi industry, where things are fairly stable. In the Tamil industry, based on what I have been told, you are just trying to get to a smaller negative number. Investors will hold any profits from a future film against losses from a past one, so the drive is to release Film D and make money is in hopes of paying off Film A, and then taking money from Film E to pay off Film B and so on and so forth, until eventually you die in debt.

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It’s a very unhealthy business, and it doesn’t have to be any more, but it is almost impossible to break that kind of cycle once you are in it. Indian film makes oodles of money, if someone is cautious, gets the right kind of investment start up funds, and only makes moves after getting rock solid contracts signed and considering all the movements of the industry, they can have a stable long term income from films. That’s what Yash Raj Studios did, they lucked into DDLJ making an enormous amount of money just as technology (DVDs) and laws (liberalization of the economy) loosened things up to allow them to fold that money into investment and multiply it. But beyond that set of circumstances, they were just cautious. A slow build over years, avoiding any outside debts they would have to scramble to pay back, diversifying carefully as new technology arrived, and never starting a film unless they were sure they had the funds to finish it and if not make a profit, at least avoid debt.

Sounds easy, right? But you can only do it if you have the where withal to resist the flow of how things have “always” been done. Back in the bad old days when investment in films was limited, the only way to go about things was to make movies as fast as possible while you had the money and try to get your investment back, and convince everyone else to gamble with you. That’s still what everyone expects, artists and investors alike. If you say “I want to make this movie, but first I want to spend 4 months getting rock solid contracts, analyzing the budget to the penny, and considering the ebb and flow of the market at the present time”, then the response would be “that guy doesn’t really believe in his movie, I am avoiding him”. Not even “believe” in it in the artistic sense, “believe” in it in the commercial sense. If you think your movie will be a hit, then what do you care if the second lead’s contract has a clause about profit sharing? What do you even care about contracts, when it hits it big, just buy everyone a new car as a gift!

We see ripples of this attitude all the time, for example the way Karan Johar came out and apologized for Kalank. He’s the one who lost money, he made a bad business decision, but he didn’t phrase it as “I failed to properly assess the market and therefore my corporation shows a loss this quarter”, he phrased it as a passionate heartfelt decision that makes him miserable when it fails. That’s the expectation, that’s the peer pressure, if you really believe in the film, you will go all in on it. Otherwise, no one else will believe in you.

Most successful father-son duos in the Hindi film industry ...
This is the advantage of Aditya Chopra’s social anxiety disorder, he doesn’t care about or even notice peer pressure and runs his studio the way it makes sense to him. Only studio that has announced they will hold off and wait for theaters to reopen, they are in no rush.

Which brings us to today. With movie theaters closed indefinitely, moves are not releasing. For most producers who went “all in”, that means they are losing more money every day as their ruinous loans keep taking on more interest payments, and the pure expense of keeping a company going adds up and up and up. A producer expects a quick pay out, even before the box office, because they sell the distribution rights ASAP to cover their debts and the distributors make the box office money. Now, distributors aren’t buying because theaters aren’t playing, and so producers are sitting on product they borrowed to manufactur and now can’t sell.

Think of it like a shoe factory. You get a design for a new high heeled shoe, you borrow tons of money because you are sure of the market for this design, and then just as you are about to start selling it to stores, a new law is passed in your country saying that high heel shoes are illegal because they are so damaging to the foot. You are sitting there with a pile of shoes and a pile of debts. You are desperate for money and ready to off load the shoes to anyone who will have them at any price. And now, enter the sleazy middle-man. He knows you are desperate to get rid of your shoes because he follows the news and knows that high heels are now illegal in your country. He is rich but eager to get richer, and he knows there is a market for high heels in the neighboring country. Shoes in your country cost $10 to make and sell for $20. Shoes in the neighboring country sell for $8. But right now, you can’t sell your shoes at all. So when this businessman shows up and says “I will give you $5 per shoe to take them off your hands”, you have no other choice and have to take the money he offers. And then the businessman turns around and takes the shoes to a new market and sells them for $7 (undercutting the local businesses) and makes a tidy profit while you, the shoe producer, are impoverished and the local shoe companies in the other country are driven out of business since they can’t compete. And eventually, no one has shoes at all because no one can afford to make them in the current market.

Using the shoe factory metaphor, what this market means is that the film industry of India will go bankrupt as they are forced to take below-cost money for their product. The theaters of India will go bankrupt as there is this burst of theatrical quality product available to the consumer at a lower cost. And the consumer themselves will eventually lose out as no one will be able to afford to make product for them any more.

Internet - Our World in Data
Already beginning to happen as theaters close thanks to streaming competition. Notice as of 2017, India is one of the least internet covered countries in the world. The consumer is already losing out on product as the producers of the product they can access are driven out of business thanks to cheaper competition.

But, good news! I think the sleazy middle-man (in this case streaming services) may be underestimating the loss to them of driving the movie factories of India out of business. Because they are treating the product like a shoe, and it isn’t really. It’s the idea of a shoe.

Prime and Netflix and Zee5 and now Disney+HotStar have been making massive amounts from Indian films with minimal investment, at the same time producers and distributors and theaters have been seeing losses on those same films. It has to do with marketing costs and how they are distributed. A film like Zero, for instance, made enough money to choke a horse on streaming and no money in theaters. The audience for various reasons was not willing to see it in theaters (ticket prices, access to screens, peer pressure, pick your reason). But the promotional campaign around the theatrical release, everything from press conferences to posts outside theaters, let them know about the film and got them excited for it. Once it hit streaming, that marketing effort that was aimed towards the theatrical release and paid for by the money budgeted for the theatrical release, benefited the streaming release.

There’s the immediate actual marketing budget, the line item paid for by the studio and distributors for hiring a room for the press conference and paying for TV ads, but also the hidden marketing budget that revolves primarily around Stars. The ineffable star power of a big screen movie star in India far outpaces the star power of anyone on a smaller screen. That is decades of investment, decades of people seeing their names and faces, decades of celebration for movie opening nights, decades of awards shows and live performances and everything else. Zero made money for streaming because the regular film industry invested 25 years in Shahrukh Khan long before Zero hit streaming.

Zero Becomes The Best Selling Movie On Google Play; Beats ...
The day it released on google play, Zero was the second highest selling streaming film IN THE WORLD.

I think these streaming companies may be getting in over their heads expecting that kind of profit from a theatrical film, that skips the theatrical release. Because I am a (very small) influencer in the market, and I know it’s going to affect me, so it will effect them. It already has. When there is a new theatrical release, I know about it because I look at the listings for my local theater. I go opening night, because every Friday is opening night. And I always see the new release, because it is what is playing. Now, I am already lost trying to figure out the release schedule for these streaming films. Like, what day of the week is it. What time. And where? It’s easy to find a movie in theaters, you just look at the theaters, but with these streaming releases even if the marketing campaign successfully tells me the date, they also have to drive into my head which is the source. Plus, as someone who loves movies, now I am torn between watching the newish streaming release (once I figure out when it is coming out and where), and an older release that I already know is high quality.

I’m not saying I am the prime mover in the market, but I am one of the people who makes the dominoes fall. I review a movie here, we talk about it here, it sticks in your mind, 3 months later it hits streaming and you remember my review, so you watch it. I’m one of millions of people who perform the same function in the world, and we are all of us (all many millions) going to be removed from the picture with streaming. That friend who sees the new movies every week, that twitter person you follow, they are no longer going to be bumping the newest films to the top of your consciousness. There will be no posters you pass on your way to work, no pop-up ads in your browser, no songs playing on the TV. The new movie will release, and will sink into the same massive stream of all movies available to you with nothing to make it special.

I just don’t think streaming services have any idea how much goes into these theatrical release promotions for Indian films before they swoop in and garner the profits. I also don’t think they have any idea how much of it relies on the sort of coordinated international effort they just can’t do. It seems like The Internet should lead to more of a global community for film, but at least in the case of Indian films, our experience has shown that it so SO doesn’t!

I don’t have Zee5, because it isn’t available in America. I will not be watching or reviewing this film, meaning those of you who are influenced by me or anyone else based in America, even if you have Zee5 access, will also not watch it.

Just on the simplest level, every individual user of a streaming service has a unique interface. The streaming services are designed to narrowcast, to show you things they think you will want or let you search for exactly what you want. How is that going to work when they are trying to recreate a Wide Release promotion effect? In India they can just slam an ad across the top for all to see saying what new movie they have added. But what about those outside of India who are equally interested? How is Prime planing to alert all of us, say 10% of the non-Indian audience, without irritating the 90% who don’t care? It’s a unique market, one that both is and is not global, worldwide enough that you can’t afford to risk leaving that money on the table (unlike, say, French movies that you can probably just promote in France without much loss), but small enough that you can’t just promote across the board (unlike the big Hollywood films that you are safe promoting to every market).

So the end result is going to be films that release without a coordinated day of publicity push, which has long term consequences in lowering the overall audience (especially overseas), which means these movies that streaming services normally would have picked up and made a vast profit on thanks to the initial release promotions will now drift out unnoticed and end up losing them money.

I don’t know what the end of this will be, but one thought that occurs to me is streaming services supporting theatrical releases on a modest scale as a marketing expense. Think of the whole theater release like a critics showing that is necessary to get the word out to the audience. Yes, a lot of theaters are going to shutter, and yes more films will go straight to streaming after this, but I don’t think the movie industry that streaming relies on can survive without some form of “opening weekend theatrical release” in the world.

Or an alternative thought, perhaps streaming services will start promoting these major Indian releases to everyone everywhere, much more like Hollywood films, as they realize they can’t afford to lose any potential viewer, and the market will grow.

16 thoughts on “Thought Post: Movies Releasing OTT, Why I Think Prime and Netflix Are in Over Their Heads

  1. Already the word “streaming” gives me the feeling of continuous motion, passing by, no beginning-no end…just looking at the “water” and do some fishing or catching a branch or sieve some gold etc.
    I also think that it makes a big difference if a movie had a well-known theatre release and later changes his way of appearance. I wasn’t really suprised by the way Zero fared when streamed…and somehow, I’m okay with the fact that ShahRukh didn’t do another movie yet.

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    • Yes! Streaming implies this constant stream with no particular landmark in it. How can a new film make an impact when it is just one drop of water in the flowing ocean? And without impact, how can it make back the expense of a theatrical quality film release in a timely fashion?

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  2. I just don’t understand how streaming platforms work. They don’t seem interested in getting a product out to as many people as possible, because their geoblocking decisions are incomprehensible. As you’ve noticed, we get very little on Netflix and almost nothing on Prime. Why??? I haven’t paid attention but idk if we’re even getting Hollywood releases now. We didn’t get Cats, which I am ANGRY about.

    I think they rely on targeted advertising for all their marketing of releases, but afaik Netflix only uses geo data to recommend things, which is insane.

    I honestly think it will mostly be the death of local theatres.This happened here after the transition to sound film and various political situations killed the European film industry. It happened a bit more after TV. It’s been my prediction (as you know) theatres will be only for intellectual stuff. Mass entertainment will be streaming and TV.

    At least Indian companies have their own streaming platforms, though some of those are also geoblocked (hotstar, I’m looking at you. with hatred), but what WILL we do here? I won’t miss Hollywood, but we don’t even have stuff like the Criterion channel or whatever. I should look into a subscription to the national film insitute so I can at least watch silent films.

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    • I am fascinated by how much we all here rely on einthusan, not because we don’t want to spend money, but because it makes up for the flaws in the more legal sources just in how it is designed as a website. As soon as a movie releases anywhere, it is on einthusan everwhere. Even if you don’t watch it there, at least it alerts you to the fact that it is available. The newest releases (not new to the system, but newest in the world) are always on the homepage. And you can sort by language. I’ve used einthusan loads of times simply as a reference, see what titles they list as newest available, and then painstakingly search title by title on every other system until I find the legal source. That’s it! That’s all you need to make streaming usable, global unity in availability, sorted by language, newest released movies on the homepage. And that is also the best reflection of theatrical release, everything all over the world at once, labeled by language, neatly listed out in your movie listings. You need that before you can even gather the data for recommendations.

      Every time there has been a leap forward in technology or just change in the world, the movie theaters have whittled down to a smaller and smaller number. I think this will cut them down even farther, but not completely, because the streaming services need that initial theatrical release. I mentioned maybe a movie theater release as kind of a “critic’s screening” for people like me, but maybe also as a focus group? The streaming services need audience data before they can structure themselves, and the initial theatrical release is what gives them that data.

      forget streaming versus theatrical, let’s take a moment for streaming versus DVD!!!! At least geoblocking on DVDs was easy to get around, and you could order the physical item to be shipped to you anywhere in the world. Plus you didn’t have to worry about streaming services cutting their library and you losing access to it. That’s what I really miss when I think about the more obscure films, the days when I could find any film in the world, on DVD, and buy it one time to have forever.

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      • I just did that the other day on eithusan! I’m doing it weekly now, just as you said, to get a handle on what released.

        That makes sense, like a small release for the critics and cultural elite (kind of like what I said, with theatres being for intellectuals) to see the movie and spread word.

        Oh man, I’ve become bonkers about DVDs the past few years. I hoard them like a dragon hoarding a treasure. My DVD copy of Hatya is coming with me if my house ever catches fire, I swear. Streaming services don’t care about old movies at all, unless someone is doing a remake and the rights holder makes them remove all copies.

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  3. I really connect with your comments about einthusan. For example, I discovered that Kaamyaab was streaming there and then searched until it appeared on Netflix and watched there. But there are still many, many movies you can find on einthusan that you can’t find anywhere else. Makes me wonder how interested the big guys–I’m looking at you Netflix and Prime–really are in capturing the Indian film-watching audience.

    Another thing that makes me wonder about their seriousness in capturing audience like us: As you know, I’m a Shah Rukh fan to the core. When you search Prime for Shah Rukh Khan, the results include more films he’s NOT in than those he is. What’s that about?

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    • EXACTLY!!! I think the Prime search feature searches for both movies with him, and movies “like” movies with him. Or movies produced by him (he is officially attached to a lot of Dharma films) or movies with co-stars he had or stuff like that. And also just movies that include the words “Khan” and “Shah” or something in the description.

      But there is less of an issue with American actors because their search feature is acclimated to the names better, I think. I doubt that “Harrison Ford” is going to pull up a bunch of movies about “forts”, because Prime knows you mean the name, not something else.

      It’s not just the Shahrukh search, it’s other stuff too that just reveals this great lack of knowledge that is affecting how useful their platform is. Like, the cast list for Aaja Nachle doesn’t include Akshaye Khanna. And he’s an actor there are definitely people who would be searching just for him. The whole search feature and browse feature is designed more around genres than actors, and in Indian film the focus is on actors not genre. Which works okay now because you know about the big new film of your favorite actor through the promotions around the theatrical release, and then you search for it specifically by title on streaming. But without a theatrical release, Prime just is not structured to tell people “Hey, the new Amitabh Bachchan movie is premiering exclusively here”. Instead they are going to say “if you like quirky comedies, you might like Gulabo Sitabo”.

      On Sun, May 17, 2020 at 3:30 PM dontcallitbollywood wrote:

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      Liked by 1 person

  4. I don’t normally get a lot of time for streaming but during the lockdown I feel like I’ve become an expert at Prime and Netflix. Without a doubt, the Prime interface is almost unusable. I watch a lot of Indian content but I still don’t get new releases on my home screen. There is no way to know if they’ve gotten new content. The only reason I can find it is because I search online first, figure out the titles and then do a specific search. I have to control my parent’s account and add things on their watchlist because they would never be able to find anything. Even theatrical releases don’t show up on the main page if they recently added something. Average people have no clue when a specific movie or show will arrive on streaming so they just end up forgetting it even if they wanted to watch it at one point. It also really sucks that they keep throwing in paid-content all over the place that’s not included with Prime and costs extra.

    Netflix’s UI is so much better simply because you can browse what’s “coming soon” and they list everything – all international movies and shows. You can just put a reminder for yourself and it will automatically pop up on your screen when it starts streaming. On Prime, even if you already know a movie is coming soon, they have no page dedicated to it until the day it starts streaming! Even if you search a week early, it won’t be found. My parents mostly just watch Indian stuff but Netflix still sometimes adds international content on the home page. Because of that they’ve ended up watching some Spanish and even Belgian content.

    I think Netflix is also spending a decent amount on promotion or maybe they’re using their media relationships. RCE’s show Betaal is coming out soon and I’ve seen it being covered by a lot of non-Indian sites. Rotten Tomatoes, SlashFilm, Entertainment Weekly and several other American sites put up articles for it along with the promo. So did many Spanish, German, and other ones. They specifically marketed to horror-based platforms too. At some point, I’m sure they want a breakout coming from India the way Spain had Money Heist or Israel had Fauda.

    Prime isn’t even trying. Their marketing and user interface is absolute garbage but ironically, their Indian content is WAY better than Netflix’s. They buy a lot more popular movies and their shows are much better in content too when it comes to their Indian products.

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    • Yes! This matches exactly my experience! Netflix is better, but still not great. Unless you are willing to troll through coming soon, you run the risk of missing a major new release. But Prime is just a disaster.

      They must have paid serious money for these movies, but they can’t make it back if no one knows how to find them and that they are there! Maybe there is going to be a big publicity campaign in India somehow, but won’t they also want my money for watching in America? How are they gonna let me know it’s there? And I say “me” meaning the influencer people. How are you going to get people excited and talking about it, so that other people will search for it and watch it? Without putting it on your homescreen or doing anything to help us know it is there? No one’s going to watch some weird Amitabh movie they’ve never heard of if there are no reviews of it anywhere.

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  5. I guess I am one of the few who’s happy streaming movies. I generally look at the latest ones available. I follow Netflix and Prime on instagram and save movies that I like. Based in India, most Indian movies are easily available to me. Plus, I can see what I want without paying out huge sums of money for cinema costs for the family, and popcorn and parking, and what not!

    I still remember shelling out for Raazi in the theater, only to see it available on Prime a week later (while it was still running in cinema halls). Now, I just wait to see things on streaming 🙂

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    • My concern is that, eventually, you get what you pay for. Raazi was a great movie, with talented people in front of and behind the camera, original music, multiple sets, location shooting, years of planning, etc. etc. etc. The money for that came from the theatrical release, not the streaming payments. If films start going straight to streaming, the audience will be smaller (because non-Indian based folks just don’t see new movies on Prime like you do), and the money given to the producers to make their product is going to be far far smaller. And then the product will suffer.

      In America, we use a term “TV movie quality” to describe a film with a poor script, bad acting, cheap sets, and so on and so forth. It’s an old term but it’s talking about the reality that there is a difference between theatrical release quality films and non-theatrical, and that is what I am seeing in streaming as well. It’s appealing to the consumer short term, but the quality is going to start to suffer very quickly.

      On Mon, May 18, 2020 at 12:07 PM dontcallitbollywood wrote:

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      Liked by 1 person

  6. You know I’ve generally been a streaming optimist, but I completely agree the platforms have value as part of an ecosystem that lives off of theatrical release. If you kill theaters, there will be a sad shrinkage of the industry as a whole. Remind me of how companies like Facebook and Apple and Google have forced newspapers to adapt to their demands in order to reach their readers, all the while siphoning off the advertising dollars that help pay for the reporting. See where we all end up if there is no one left to pay the editors and reporters.

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    • Exactly! Someone has to create the actual content, and that’s both the films themselves and the marketing around them. The streaming services live off of the movie releases, the big buzz streaming series and so on just feed audiences off of that. If not, why would they keep buying movies? There’s also the hidden economic bubble they are in, every once in a while news comes out of just how much money they are losing on production costs for their flagship shows. Movies don’t lose money, they can afford to keep making high quality content becuase they make their money back. Netflix and Prime are living in a bubble trying to afford quality they can’t pay back. Eventually either their quality will fall even further, or they will need to switch to a more expensive system for viewers.

      On Tue, May 19, 2020 at 12:09 AM dontcallitbollywood wrote:

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  7. Well, I agree with what you are saying. Right now, if it weren’t for Einthusan I would have given up on watching or following Hindi films. I get tired while trying to find sth decent in amazon prime which is not German Dubbed and or already included in my membership.

    And Netflix has annoyed me too. I was recommending some movies to my parents and it turns out they don’t have them because they are in an entire different continent.

    And I get what you said about “TV movie quality” is also a problem in Latin america with the Telenovelas. Ever since they decided to make them to appeal to the “Streaming Services” audiences we get a half baked product.

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    • Yes! For a global audience to work, there really needs to be global consistency, not this crazy system where you can’t even recommend things to your friends because they aren’t available in their country.

      On Wed, May 20, 2020 at 7:35 AM dontcallitbollywood wrote:

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